The COVID-19 pandemic is likely to have a strong negative impact on the Nordic commercial property sector, according to a report just released by Nordic Credit Rating (NCR).
NCR reflects on whether social distancing's sudden impact on office space could have lasting implications and how the acceleration of declining retail trends could affect credit metrics of Nordic real estate companies with retail exposures.
"In our base case we expect social distancing and shelter-in-place measures to ease by the end of the second quarter, but revenues for commercial real estate management companies are likely to remain under pressure for the entire year," said NCR analyst Mille Fjeldstad, who wrote the report.
"We also expect increasing loan-to-value metrics for property managers exposed to the retail sector both through increased yields and decreasing revenues in the course of 2020," Ms Fjeldstad added.
During March, social distancing to counter the pandemic resulted in empty office space, shops and hotels across the region, while growing online shopping gained further traction, the report says.
Analyst contact details:
Mille Fjeldstad, +47 99 03 89 16, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com